The fact that so many successful politicians are such shameless liars is not only a reflection on them, it is also a reflection on us. When the people want the impossible, only liars can satisfy them, and only in the short run. The current outbreaks of riots in Europe show what happens when the truth catches up with both the politicians and the people in the long run.

Among the biggest lies of the welfare states on both sides of the Atlantic is the notion that the government can supply the people with things they want but cannot afford. Since the government gets its resources from the people, if the people as a whole cannot afford something, neither can the government.

There is, of course, the perennial fallacy that the government can simply raise taxes on “the rich” and use that additional revenue to pay for things that most people cannot afford. What is amazing is the implicit assumption that “the rich” are all such complete fools that they will do nothing to prevent their money from being taxed away. History shows otherwise.

After the Constitution of the United States was amended to permit a federal income tax, in 1916, the number of people reporting taxable incomes of $300,000 a year or more fell from well over a thousand to fewer than three hundred by 1921.

Were the rich all getting poorer? Not at all. They were investing huge sums of money in tax-exempt securities. The amount of money invested in tax-exempt securities was larger than the federal budget, and nearly half as large as the national debt.

This was not unique to the United States or to that era. After the British government raised their income tax on the top income earners in 2010, they discovered that they collected less tax revenue than before. Other countries have had similar experiences. Apparently the rich are not all fools, after all.

In today’s globalized world economy, the rich can simply invest their money in countries where tax rates are lower.

So, if you cannot rely on “the rich” to pick up the slack, what can you rely on? Lies.

Nothing is easier for a politician than promising government benefits that cannot be delivered. Pensions such as Social Security are perfect for this role. The promises that are made are for money to be paid many years from now — and somebody else will be in power then, left with the job of figuring out what to say and do when the money runs out and the riots start.

There are all sorts of ways of postponing the day of reckoning. The government can refuse to pay what it costs to get things done. Cutting what doctors are paid for treating Medicare patients is one obvious example.

That of course leads some doctors to refuse to take on new Medicare patients. But this process takes time to really make its full impact felt — and elections are held in the short run. This is another growing problem that can be left for someone else to try to cope with in future years.

Increasing amounts of paperwork for doctors in welfare states with government-run medical care, and reduced payments to those doctors, in order to stave off the day of bankruptcy, mean that the medical profession is likely to attract fewer of the brightest young people who have other occupations available to them — paying more money and having fewer hassles. But this too is a long-run problem — and elections are still held in the short run.

Eventually, all these long-run problems can catch up with the wonderful-sounding lies that are the lifeblood of welfare state politics. But there can be a lot of elections between now and eventually — and those who are good at political lies can win a lot of those elections.

As the day of reckoning approaches, there are a number of ways of seeming to overcome the crisis. If the government is running out of money, it can print more money. That does not make the country any richer, but it quietly transfers part of the value of existing money from people’s savings and income to the government, whose newly printed money is worth just as much as the money that people worked for and saved.

Printing more money means inflation — and inflation is a quiet lie, by which a government can keep its promises on paper, but with money worth much less than when the promises were made.

Is it so surprising voters with unrealistic hopes elect politicians who lie about being able to fulfill those hopes?

Has Barack Obama learned nothing in three years? Last night, during his State of the Union address, he promised “a blueprint for an economy.” But economies are crushed by blueprints. An economy is really nothing more than people participating in an unfathomably complex spontaneous network of exchanges aimed at improving their material circumstances. It can’t even be diagrammed, much less planned. And any attempt at it will come to grief.

Politicians like Obama believe they are the best judges of how we should conduct our lives. Of course a word like “blueprint” would occur to the president. He, like most who want his job, aspires to be the architect of a new society.

But we who love our lives and our freedom say: No, thanks. We need no social architect. We need liberty under law. That’s it.

Obama — and most Republicans are no different — doesn’t understand the real liberal revolution that transformed civilization. The crux of that revolution is that law should define general visible rules of just conduct, applicable to all, with no eye to particular outcomes. In other words, as Nobel laureate F.A. Hayek taught, the only “purpose” of law is to enable us all to pursue our individual purposes in peace.

If Obama really wanted, as he says, a society in which “everybody gets a fair shot,” he would work to shrink government so that the sphere of freedom could expand. Instead, he expands government and raises taxes on wealthier people, as though giving politicians more money were a way to make society better. Instead, the interventionist state rigs the game on behalf of special interests.

What should Obama have said in his speech? Here’s what I wish he’d said:

Our debt has passed $15 trillion. It will reach Greek levels in just 10 years.

But if we make reasonable cuts to what government spends, our economy can grow us out of our debt. Cutting doesn’t just make economic sense, it is also the moral thing to do. Government is best which governs least.

We’ll start by closing the Department of Education, which saves $100 billion a year. It’s insane to take money from states only to launder it through Washington and then return it to states.

Then we eliminate the Commerce Department: $9 billion. A government that can’t count votes accurately should not try to negotiate trade. We will eliminate all corporate welfare and all subsidies. That means agriculture subsidies, green energy subsidies, ethanol subsidies and so on. None of it is needed.

I propose selling Amtrak. Why is government in the transportation business? Let private companies compete to run the trains.

And we must finally stop one of the biggest assaults on freedom and our pocketbook: the war on drugs. I used drugs. It’s immoral to imprison people who do what I did and now laugh about.

Still, all these cuts combined will only dent our deficit. We must cut Medicare, Social Security and the military.

I know. Medicare and Social Security are popular. But they are unsustainable. The only way to cut costs and still have medical innovation is to free the market. So I propose that we repeal Obamacare immediately. My proposal was a mistake. We should repeal all government interference in the medical and insurance industries, including licensing. It all impedes competition.

We must shrink the military’s mission to true national defense. That means pulling our troops out of Germany, Japan, Italy and dozens of other countries. America cannot and should not try to police the world.

Those cuts will put America on the road to solvency. But that’s not enough. We also need economic growth.

Our growth has stalled because millions of pages of regulations make businesses too fearful to invest. Entrepreneurs don’t know what the rules — or taxes — will be tomorrow.

All destructive laws must go. I endorse the Stossel Rule: For every new law passed, we must repeal two old ones.

Let’s play “Who wants to be a CEO?” Ok, you are about to create or save a $50,000 job just to claim that new $780 one-time payroll tax credit when the Department of Justice comes blasting into your office with guns drawn and confiscates all your raw materials.

Do you a) thank the President for his bold leadership in job creation, b) blame the Tea Party for foiling his perfect and most wonderful vision of our nation, or c) move your plant to another country where they need warrants to seize your property. Ding ding ding ding ding ding!

Let’s stay with No-Brainers for $400, Alex. Ok, you are about ready to place orders for a few million dollars of new capital equipment that you don’t even need just to take advantage of the President’s one-time accelerated depreciation rule when the NLRB forces you to abandon the billion-dollar plant you just built in South Carolina and move the work to Washington state and overpay union guys who go on strike a lot.

Do you a) praise Mr. Obama for tinkering with an obscure accounting rule in order to benefit Wall Street banks, b) blame the Republicans for not doing it first, or c) build your next plant in a country where mobbed-up union bosses don’t threaten to “take you out” when they welcome the President to their stage. Ding ding ding ding ding ding!

Bonus Round: You are trying to decide where to site a new industrial facility that will employ thousands when you learn that EPA has passed arbitrary rules that will shut down over 20 power plants, double your energy costs, and cause rationing of electricity. Do you, a) salute the President for his commitment to his donors’ green job subsidies, b) blame George W. Bush for global warming, or c) build your plant in Brazil where they will sell you all the energy you need at low costs. Congratulations – you just won an all-expense-paid trip to Sao Paulo!

I must confess I did not watch the President’s speech last night, I just read a transcript this morning. While he was putting lipstick on his recycled 2009 stimulus pig, I was driving home from a meeting with Wisconsin Governor Walker at one of our plants up north. What a contrast.

President Obama told us (again) what Congress needed to do to create jobs, as if they could; Governor Walker asked us how we create jobs in our company. The President dictated incentives and demanded we hire more workers; the Governor asked us what government could do that might matter to us.

President Obama encouraged everyone (again) to go to college. We talked with Governor Walker about the shortage of skilled trades and technicians and the high-paying jobs that we can’t fill for lack of qualified candidates. I learned that most students at Wisconsin’s two-year technical colleges have four-year degrees (and a mountain of student loan debt) in fields where there is no demand.

President Obama promised to plug school budgets and increase teacher pay for a year (again); Governor Walker asked us what Wisconsin students need to learn in school to be employable. The President lectured a room full of professional politicians; the Governor took questions from our plant employees – and he answered them.

But here he goes again with the roads, bridges, and schools shtick – $150 billion to rebuild our infrastructure after he just threw $800 billion down that rat hole with nary a single new road, bridge, or school to show for it. Here’s a clue: 15 million unemployed Americans aren’t going back to work on roads unless President Jobzilla has 15 million surplus CAT D7 bulldozers stored with the cheese in those government warehouses of his.

And am I the only one that sees pure hypocrisy in the President’s “payroll tax holiday”? You realize, I hope, that the payroll tax he is talking about is your Social Security withholding. So not only are you contributing less, which might reduce the amount of benefit you will receive when you retire, but your “holiday” will be taxed at ordinary income rates come the end of the year.

Not to mention that those payroll taxes are what funds Social Security, an already broken system that Republican Rick Perry correctly called a “Ponzi scheme” in Wednesday’s debate. That “tax holiday” money was supposed to go into the Social Security Trust Fund, the pot of money they keep saying is really there for you even though they spent it all on other stuff like teleprompters and tour busses from Canada.

The President just proposed to defund Social Security by 50% and not one liberal went hysterical on him. Not one drum, not one “war on the middle class”, and nothing but gurgling coos from the infants at MSNBC. If a libertarian did that (or Paul Ryan) all hell would break loose. And how did Social Security get so flush with cash all of a sudden that President Obama can afford to defund it for a whole year? A month ago, we didn’t even have enough money to cut checks to recipients without raising the debt ceiling and borrowing more money – remember all the wheelchairs going over the cliff on August 3?

I’m not sure if our Jobzilla President even knows how any of this stuff actually works. The advance hype for his big speech said Mr. Obama would solve our jobs problem with over $400 billion of “tax cuts and spending increases that would be paid for by deficit reduction.” Three letters: W, T, and you-pick-em. That statement would need a lot of editing just to be upgraded to stupid.

Here is what is so sad: someone with a college degree wrote that talking point, dozens of people with college degrees approved it, and hundreds of journalists and editors with college degrees printed it. And our President thinks even more people should go to college.

I think less people should go to college and more people should learn to drive bulldozers. And build them and design them and service them and make parts for them, and mine the iron and make the steel and drive the trucks and drill the oil wells and refine the diesel fuel and build ships and nuclear power plants and windmills and appliances and foundries and factories and all the cranes and machine tools to fill them up.

The only jobs plan we need is to get the government off our back so we can do all those things here again. That will put 15 million Americans back to work – for real.

During the debate on the debt ceiling the Democrats continually accused the Republicans of holding Social Security and Medicare checks hostage, even though this was a lie and the money would have been there regardless of whether or not the debt ceiling was raised. This was a blatant attempt to pressure the Republicans by scaring the senior citizens, and now it appears as if the Democrats are up to similar dirty tricks when it comes to Hurricane … Read More

The political class predicted “disaster” if Congress didn’t raise its debt limit.

I think that was a scam to get more money. See, the poor politicians don’t have enough, and they need to borrow more. We taxpayers are cheap. This year we’ll give them only $2.2 trillion. They want to spend $3.8 trillion.

The president said if he didn’t get more money, Social Security checks wouldn’t go out. Why not?

With $2 trillion, they can pay Social Security, Medicare, the interest on the debt and still have billions left. It’s billions more than the government spent when President George W. Bush took office. What’s the problem?

The problem is that Republicans and Democrats under Bush and President Obama doubled spending. Now, Obama wants more taxes.

Taxes shouldn’t be the answer when spending is the problem.

Grover Norquist, who heads Americans for Tax Reform (ATR), leads the charge to keep the focus on spending. Norquist and ATR are famous for asking officeholders and candidates to sign a pledge not to raise taxes. Some say he is the reason the debt-ceiling debate was so drawn out.

“I think the reason there isn’t a tax increase on the table,” he told me, “is that 235 members of the House of Representatives signed a pledge never to raise taxes, a pledge to their voters, and 41 senators did. …

“Only if you take tax increases off the table do you even begin to … focus on spending, and that’s what Obama wants to keep our focus off of. He wants us to talk about the deficit, not spending.”

I pointed out that Obama might have scored points with the public because new revenues he sought — even though they wouldn’t do much to shrink the deficit — would come from closing unpopular tax “loopholes.”

Norquist said he favors that — if tax rates are lowered at the same time.

“(We) want to simplify the code,” he said. “(We) want to take a lot of the goodies that politicians have laced into that code … as long as you reduce tax rates and it’s not a hidden tax increase.”

Milton Friedman always said taxes don’t tell the whole story. What counts is how much of our resources government spends, however it acquires them. The doubling of spending under Bush and Obama hasn’t gotten enough attention.

“We need to ask what it is government should do,” Norquist said. “But it’s going to be knockdown, drag-out. All government overspending creates the constituency for its own perpetuation. … Weaning people off, that is very difficult.”

He’s right. When politicians make little cuts in the rate of spending growth, every interest group mobilizes to protect its little piece of the pie. That’s why you must cut government like you take off a Band-Aid: quickly and all at once.

It’s not hard to balance the budget. On my show, we made enough cuts to create a $237 billion surplus. I cut whole departments, like Education and Commerce. I cut two-thirds of the Defense Department (which still leaves it much bigger than China’s). I indexed Medicare, Medicaid and Social Security to inflation, raised the retirement age, and took away benefits for rich people. But I don’t have to run for office. Congressmen do, and they can’t even manage to cut ridiculous tax breaks like those for ethanol.

Obama predicted disaster if the debt ceiling wasn’t raised. Some predict disaster if the ratings agencies downgrade Treasury bonds. I’m dubious. In 1995, President Clinton and Republican Congress couldn’t agree on a budget, so the government shut down twice, the second time for three weeks.

Did the economy grind to a halt? No. During the first shutdown, the stock market went up. During the second, it dropped then recovered.

The alarmists screamed that the fight over the debt ceiling would discourage lenders. Wrong. Ten-year Treasury bonds sold for a measly 3 percent interest (versus 15 percent in 1981).

I wasn’t worried that Congress would fail to raise the debt ceiling. But I am worried that Congress will keep spending.

To be a Democrat means to live in denial. Consider all of the things you must ignore or explain away.

The PIGS. Not the chauvinist pigs whose transgressions preoccupied 1970s feminists, but PIGS as in Portugal, Ireland, Greece and Spain — nations facing sovereign debt crises because they pursued exactly the sort of policies Democrats favor for this country. The PIGS share bloated government sectors (In Greece, the government employs 33 percent of workers.), generous unemployment packages, high minimum wages, dire pension obligations and a shrinking tax base. Each week brings fresh news of turmoil in the streets.

Here is a June account from CBS News that Democrats will want to ignore: “To see a country truly on the brink of financial ruin, look no further than Greece. On Wednesday, its parliament cut public services and raised taxes to fend off bankruptcy and probably spare the world another mass economic meltdown, at least for now. … As parliament did what it could politically, protesters turned Athens into a war zone.”

The protests are understandable (if not excusable). When debt-ridden states face bankruptcy, it is always at a time of economic distress. In good times, after all, tax receipts increase. So just when jobs are scarce and times are difficult, just when a greater than usual number of people are collecting unemployment and other benefits, the government is forced to impose austerity.

Would it have been better to have made smaller reductions in benefits earlier? Yes. Would it have been even more desirable not to accustom so many citizens to government largesse? Don’t ask a Democrat.

Also in economic intensive care is Portugal. Here’s the Los Angeles Times account: “Analysts expect that Lisbon will ultimately need up to $115 billion in loans and guarantees. The amount would be covered fairly comfortably by the bailout fund created by the EU last year to address the widening euro debt crisis, but would come with stringent conditions that Lisbon rein in public spending. Last month, Prime Minister Jose Socrates failed to win parliamentary approval for a fourth round of austerity measures within a year, which prompted him to resign and his Socialist Party-led minority government to collapse.” Democrats will not want to dwell on the fact that the European Union will not be bailing out the United States. In fact, no one will be available to bail out the U.S.

Chile. At the other end of the economic spectrum, Democrats must ignore Chile’s remarkable success with privatizing social security. Thirty years ago, facing a pension overhang similar to our own, Chile adopted a policy that nearly all Democrats regard with horror — they privatized their pension system. Not all at once. Those who were already retired were grandfathered into the existing system. New workers were required to participate in the private retirement account program. All other workers were offered a choice to remain with the old system or choose the new one. Ninety-three percent chose private accounts, conservatively managed.

How has it turned out? Over the course of three decades, despite ups and downs in the market as well as terrible earthquakes, these accounts have averaged returns 9.23 percent above inflation. Social Security, by contrast, averages returns of about 1 percent. In the United States, the elderly are wards of the state. Each Chilean, by contrast, has ownership of his account. He or she can pass any unused portion on to children and grandchildren. When New York Times reporter John Tierney worked out his own Social Security contributions on the Chilean model, he found that his privatized pension would have been $53,000 a year plus a one-time payout of $223,000. The same contributions paid into the American Social Security system would have paid him $18,000 a year.

Chile’s free market policies have made it one of the wealthiest nations in the Western hemisphere, with the highest nominal GDP in Latin America. Their pension reform has so far been copied by 30 nations.

Perhaps Chile, so far from Washington, D.C., is too easy to ignore. But what about Galveston, Texas? It seems that 30 years ago, far-sighted leaders took advantage of an opt-out clause (since removed) in the Social Security law and put county employees into private pension accounts. Galveston’s employees take home pensions with 7 percent annual return compounded over 30 years compared with Social Security’s 1 percent.

Democrats must, simply must, deny that privatization provides far superior outcomes, because the truth is that independent, self-sufficient, non-needy citizens have little use for a party whose entire rationale is “Let Me Take Care of You” by taxing someone else.

President Obama said Tuesday that he may have to halt Social Security benefit checks in August if he and congressional leaders can’t agree to raise the government’s debt limit.

Top Republicans denounced Mr. Obama’s comments as scare tactics aimed at pressuring the GOP to blink in the high-stakes fight, and Senate Minority Leader Mitch McConnell said he no longer thinks a debt solution is possible “as long as this president is in the Oval Office.”

Seeking to shift political peril to the White House, Mr. McConnell, a Kentucky Republican, proposed a set of procedures that would allow the president to raise the debt limit without having to rely on Republican votes.House Speaker John A. Boehner, Ohio Republican, told Fox News that negotiators are considering several backup plans as prospects for a deal diminished.

Mr. Obama warned of dire consequences should the two sides fail to reach an agreement.

“I cannot guarantee that those checks go out on Aug. 3 if we haven’t resolved this issue. Because there may simply not be the money in the coffers to do it,” he told CBS News.

It’s the furthest the administration has gone in signaling that it is thinking about what payments it will have to suspend if a deal isn’t reached.

Mr. Obama said the government sends about 70 million benefit checks to Social Security recipients, disabled veterans and others.

His comments drew a harsh reaction from the nation’s largest senior citizens lobby, which called on him and lawmakers to “stop the irresponsible rhetoric.”

“Now is not the time for elected leaders on either side of the aisle to play politics with Americans’ hard-earned Social Security benefits,” AARP Executive Vice President Nancy LeaMond said. “While there may be disagreement over different policies, there should be no disagreement that it would be both irresponsible and immoral to fail to make Social Security benefit payments to seniors who worked and contributed over their lives to earn their benefits.”

The group also warned against cutting Social Security and Medicare benefits to help pay the nation’s bills.Bipartisan negotiations over the president’s “grand bargain” to slash trillions of dollars from the deficit appear to be sputtering. Lawmakers from both parties have met for three consecutive days, but instead of emerging with signs of progress they’ve drawn lines they say they can’t cross.

The Treasury Department says the government will bump against the $14.29 trillion borrowing ceiling on Aug. 2.

At that point, the government will not be able to borrow any more money and can pay out only what it generates in revenue. Given that spending exceeds revenue by about 36 percent, that means more than a third of all payments the government makes would have to be suspended.

With pessimism growing, Mr. McConnell on Tuesday introduced a “backup plan” to increase the debt limit should negotiations fail.

Mr. McConnell’s proposal is a complicated legislative maneuver that would, in effect, let the president increase the nation’s debt limit with only Democratic votes and subsequently allow Republicans to wash their hands of the politically poisonous issue.

Under the scenario laid out by Mr. McConnell, Mr. Obama would request an increase in the debt ceiling of up to $2.4 trillion in three separate submissions by next summer. The divided Congress likely would reject those requests, which the president then presumably would veto. If Congress failed to muster the two-thirds vote needed to override a veto, the debt ceiling would effectively be lifted by the amount Mr. Obama requested.The plan would require Mr. Obama to submit spending cuts along with his borrowing requests. But unlike the increase in the debt limit, they wouldn’t automatically take effect.

“This is not my first choice,” he said. “My first choice is to get an agreement with the president to significantly reduce spending. And we’re going to continue to talk to them about that in the hopes that we can get there.”Some conservative activists have accused Mr. McConnell of surrendering to Democrats and the president.

“If Mitch McConnell thinks caving to President Obama and allowing him to raise the debt ceiling without cuts is the way to become Senate majority leader he is sorely mistaken,” said conservative activist Brent Bozell. “The American people elected him to serve as a check on Obama’s appetite for out-of-control spending, not to write him a blank check to continue the binge.”

Even as Republicans try to force political pain for a debt limit increase onto Mr. Obama, the White House pushed back.

Mr. Carney said if the debt limit is breached, the decisions the government would have to make about payments would amount to “a Sophie’s choice situation.”

Mr. Carney said questions about the kinds of cuts possible if the debt limit is breached should be posed to the Treasury Department, but that the president was saying all programs are potentially at risk.

“We can’t guarantee, if there were a default, any specific bill will be paid,” he said, cautioning that the White House still thinks a deal will be reached.

To President Obama and all 535 Voting members of the Legislature It is now Official that the Majority of you are Corrupt Morons The U.S. Postal Service was established in 1775. You have had 234 years to get it right and it is broke. Social Security was established in 1935. You have had 74 years to get it right and it is broke. Fannie Mae was established in 1938. You have had 71 years to get it right and it is broke. War on Poverty started in 19 … Read More

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